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The J-curve and bilateral trade balances of Indonesia with its major partners: are there asymmetric effects?

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  • Mohsen Bahmani-Oskooee
  • Hanafiah Harvey

Abstract

With advances in econometric methodologies, old concepts are now receiving a renewed attention and the J-curve is no exception. Previous research that tested the phenomenon assumed that the effects of exchange rate changes on the trade balance are symmetric. Asymmetry analysis and asymmetry cointegration is the new direction that is currently being considered. We add to this later literature by considering the asymmetric effects of exchange rate changes on the bilateral trade balances of Indonesia with each of her major trading partners after accounting for Asian Financial Crisis of 1997 and Global Financial Crisis of 2008. We find support for short-run asymmetric effects in almost all the cases, short-run cumulative or impact asymmetric effects in the trade with five partners and long-run significant asymmetric effects in five bilateral models.

Suggested Citation

  • Mohsen Bahmani-Oskooee & Hanafiah Harvey, 2019. "The J-curve and bilateral trade balances of Indonesia with its major partners: are there asymmetric effects?," New Zealand Economic Papers, Taylor & Francis Journals, vol. 53(1), pages 63-76, January.
    • Handle: RePEc:taf:nzecpp:v:53:y:2019:i:1:p:63-76
    DOI: 10.1080/00779954.2017.1371207
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    Cited by:

    1. Ho Hoang Gia Bao & Hoang Phong Le, 2022. "The Roles of Vehicle Currency and Real Effective Exchange Rates in the Trade of Every ASEAN Member With the EU-28," SAGE Open, , vol. 12(2), pages 21582440221, April.
    2. Shengliang Zhao & Lixin Liu, 2023. "Novel evidence on the asymmetric J‐curve in the commodity trade between Korea and China: evidence from 75 industries," Asian-Pacific Economic Literature, The Crawford School, The Australian National University, vol. 37(2), pages 142-164, November.

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